Voluntry class 3 NI contribuiton

DoDa

I am considering making voluntry class-3 NI contribuitons for the 2012-2013 tax year for myself and my wife (neither of us worked this year and had no employment income) and would like to check this makes sense.

We are currently 48 & 47 years old and aim to "retire" in December 2016. We plan to make NI voluntary contribuitons during our early retirement to ensure we get the full new state pension.

The HM Revenue & Customs states it costs £13.25/week (total £689/year) to make a NI back payment for the 2012/2013 tax year. Should we do this now or wait until nearer retirement when we perhaps understand a more about the new pension arrangements.

The last state pension forcast we received was on 05/04/2013:

Me: 30-years giving a pension of £5822.44 (£5727.80 basic, plus £94.64 additional)

Wife: 27-year giving a pension of £6445.92 (£5155.28 basic, plus £1290.64 additional)

SnowMan

There's no rush, see this thread for the relaxed timescales for paying class 3 for people like you who come under the new state pension system (i.e reach SPA after 6/4/2016). Basically you have until 5th April 2019 to decide.

https://forums.moneysavingexpert.com/discussion/4559847

There may or may or may not be some value to paying class 3 contributions for missing purchasable years prior to 6th April 2016 (purchasable probably means 2006/2007 and afterwards). In your wife's case if she doesn't have 30 qualifying years up to 6th April 2016, there is likely to be a good case for paying class 3 for missing and purchasable years prior to 6th April 2016, to get her up to at least 30 years. Although it will depend on her specific circumstances.

But I would wait until state pension statements that reflect the new single tier pension become available before making any decision (they aren't currently available for those under age 55 whose statements only reflect the old scheme). Those statements will contain information that will make the decision you are making much clearer. In fact it is probably best to wait until after 6th April 2016 before deciding, when your state pension statement will show your state pension for all qualifying years up to 6th April 2016.

Incidentally just found this leaflet on the TPAS website which gives the same guidance to wait (for those who reach SPA after 6th April 2016).

DoDa

Thanks for your quick response. As I have plenty of time I'll wait before deciding.

molerat

It would be worth getting an on line statement now as that will tell you how many years you actually have, the last one you had stopped reporting at 30 as that is all you needed - I actually had 39 but it quoted 30. (although currently the statement still gives last year's basic pension figure as it has not been updated but quotes it as the 2015/16 amount !)